Population growth and inequality make poverty eradication a long-term challenge

Projecting the rate of economic growth across the six economies provides a framework for analysing future poverty dynamics. The first step is to identify how aggregate income gains will be distributed on the basis of the Gini coefficient. Figure 2.8, which sets out observations of the Gini coefficients by country between 1989 and 2012, shows significant variation between the six countries. Inequality has been consistently highest in Zambia and lowest in Ethiopia over this period, with a difference of more than 20% between these two according to the most recent data. The relatively rapid economic growth experienced over this period has not been associated with significant changes to the distribution of income in the majority of countries though there was a notable increase in Ethiopia. The poverty projections presented in this section assume that inequality will stay at its current level between 2015 and 2065, in accordance with a recent IMF finding that inequality appears to have remained broadly unchanged overall in sub-Saharan Africa, although there is variation across countries (IMF, 2015).

Figure 2.8. Gini coefficients, 1989 to 2012

Source: World Bank (2015), PouCalNet (database), povertydata.worldbank.org/poverty/home.

The current level of poverty, the size of the poverty gap and the level of inequality across the sample countries in 2015 are shown in Table 2.3. These are extrapolations of historic trends.3 As with the rates of inequality, the headcount poverty ratio and the poverty gap vary across the sample. Mozambique’s poverty rate and poverty gap are highest among the sample, indicating that it will have the furthest to go in terms of eliminating poverty, while the headcount ratio and poverty gap are lowest in Kenya. However, Kenya also has the second-highest level of inequality, which will dampen the poverty-reducing effect of its per capita income gains over the sample period. Zambia has the second-highest headcount poverty ratio, the second-largest income gap and (by some distance) the highest level of inequality.

None of the six countries are likely to achieve the first Sustainable Development Goal - to eradicate poverty - by 2030 or for many years after. Figure 2.9 shows projected poverty headcounts against the World Bank’s two updated poverty thresholds: USD 1.90 per day (extreme poverty) and USD 3.10 per day.4 On a 20-year view, poverty headcount ratios against the USD 1.90 benchmark (left-hand panel) will range from 9% to 35% in 2035. On a 50-year view, only three countries will have poverty headcount ratios of less than 5% against the USD 1.90 benchmark: Ethiopia, Tanzania and Uganda. Against the USD 3.10 benchmark, only Ethiopia is projected to reduce poverty to below 10% by 2065.

Table 2.3. Gini coefficients, poverty headcounts and poverty gaps, 2015

Consumption based poverty line, USD 1.90 per person per day, 2011 PPP

Gini coefficient

Headcount ratio

Poverty gap

Ethiopia

33.2

25.5

8.3

Kenya

48.5

24.4

7.8

Mozambique

45.6

55.2

22.1

Tanzania

37.8

26.7

8.8

Uganda

42.4

31.3

10.7

Zambia

55.6

47.7

18.3

Source: Authors’ calculations based on World Bank (2015), World Development Indicators (database), http://data. worldbank.org/products/wdi.

Figure 2.9. Headcount poverty ratios, USD 1.90 and 3.10 per day (2015-2065)

Source: World Bank (2015), World Development Indicators (database), http://data.worldbank.org/products/wdi.

At the current rate of progress, the number of extremely poor individuals across the six countries will decline only slightly between 2015 and 2035, from 86.3 million to 74 million, then drop to 39.4 million in 2065 (Figure 2.10). The decline in poverty in Ethiopia is responsible for much of this reduction: it is the only country where the absolute number of poor is projected to decline throughout the timeframe according to both poverty lines. In Kenya, Tanzania and Uganda, the number of extremely poor individuals will decline only slowly over the 50 years, while the number of poor as defined by the USD 3.10 threshold will increase between 2015 and 2035 before returning to its initial level. In Mozambique, poverty as defined by both lines initially increases before declining towards the end of the timeframe, while in Zambia the absolute number of poor individuals is projected to grow throughout the survey period against both measures.

Figure 2.10. Number of poor, USD 1.90 and 3.10 per day (2015-2065)

Source: World Bank (2015), World Development Indicators, http://data.worldbank.org/products/wdi.

 
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